India

Starting a Business in

India

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in India. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2013.

Compare India to 188 other economies.

  • Standardized Company

  • Legal Form: Private Limited Company
  • Paid in Minimum Capital Requirement: INR 100,000
  • City: Mumbai
No. Procedure Time to Complete Associated Costs
1 Obtain director identification number (DIN) online

By a notification dated 27 March, 2011, the Ministry of Corporate Affairs (MCA) has revised the process for obtaining a Director Identification Number (DIN). Currently the process for obtaining DIN is as follows:
1) e-Form DIN-1 has to be submitted along with photograph and scanned copy of supporting documents i.e. proof of identity, and proof of residence as per the guidelines.
2) Along with the supporting documents, the applicant has to attach a document (Affidavit) which contains the applicant's name, middle name, date of birth, text as specified and the physical signature of the applicant. The Affidavit has to be executed on non-judicial stamp paper and should be duly notarized.
3) The eForm has to be digitally signed and uploaded on MCA21 portal after which the fees for the same is paid.
4) In case Form DIN 1 is signed by a practicing professional (i.e. Chartered Accountant/ Company Secretary/ Cost and Works Accountant) and details have not been identified as potential duplicate, approved DIN is generated and if the details have been identified as potential duplicate, Provisional DIN is generated.
5) In the event of Form DIN 1 being signed by an applicant or by the Managing Director/ existing director of the company in which the applicant is a Director or the Company Secretary in full time employment of the company, or if the provided details are identified as a potential duplicate, a provisional DIN is generated.
6) In case, DIN 1 gets certified by a practicing professional (i.e. Chartered Accountant/ Company Secretary/ Cost and Works Accountant in whole time practice), the DIN will be approved by the system immediately online (in case it is not potential duplicate).
7) In case DIN 1 is signed by any other signatory (i.e. director/ Managing Director/ Company Secretary of the company with which applicant is to be associated), the MCA DIN cell will examine the eForm DIN 1 and will approve the same within one or two days.

Scanned documents to be submitted:
• Photograph of the applicant;
• Proof of identity;
• Proof of residence;
• Proof of date of birth;
• Proof of father’s name. (Proof of father’s name is not required in the case of foreign nationals)

Identity Proof:
The identity proof (issued by the Central or the State Government or an instrumentality of the State) must contain the following information:
• Applicant's name with photograph;
• Father's name;
• Date of birth.


1 day INR 100
2 Obtain digital signature certificate online

To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate. The digital signature certificate can be obtained from one of six private agencies authorized by MCA 21 such as Tata Consultancy Services, NIC, E-Mudhra, MTNL Trust line. Company directors submit the prescribed application form along with proof of identity and address. Each agency has its own fee structure, ranging from INR 400 to INR 2650.

There are total seven Certification Agencies authorized by the Controller of Certification Agencies to issue the Digital Signature Certificates. The details of these Certification Agencies are available on the portal of the Ministry of Corporate Affairs (www.mca.gov.in).

1 day INR 400 to INR 2,650
3 Reserve the company name with the Registrar of Companies (ROC) online

The guidelines briefly list out the conditions and norms that must be fulfilled while a name is selected for a company. Names that are offensive or are similar to already existing names would not be registered. The Name Availability Guidelines prescribe a time period of one to two days for registering the name of a company, however, due to the large number of applications received, typically this process takes up to 3 days, and is as follows:

1. Check availability of the proposed name by checking on the MCA21 portal for other companies or LLPs having similar names. Alternatively, engage a professional (practicing chartered accountant, company secretary or cost accountant) to perform the check on the MCA 21 portal and provide a search report which can be attached to the application.
2. Prepare the application in eForm 1A with all relevant details and declarations. If a professional has been engaged to check availability of name, have the professional certify and digitally sign the eForm 1A.
3. Upload the eForm 1A to the MCA 21 portal and pay fees of Rs. 1000 electronically (net banking or credit card).
4. If the e-Form 1A has been certified by a professional (as described above), the proposed name will be made available to the applicant online, without any backend processing, provided the name is not similar to any existing trademark, any of the words proposed in the company's name does not exactly match any existing company's name and the name does not consist of a single word (other than private limited). If the e-Form 1A is not certified by a professional or if any of these provisos are not satisfied, the proposed name will be processed by the Registrar of Companies and availability or non-availability of name will be communicated to the applicant.
5. The name, if made available to the applicant, will be reserved for the applicant to use for 60 days from the date of approval. If the proposed company is not incorporated during this 60 day period, the approval will lapse and the name will be available to other applicants.

This is in accordance with the Name Availability Guidelines 2011, General Circular No. 7/2012 dated 25th April 2012 issued by Ministry of Corporate Affairs, Government of India. The fee for registering the name of a company is INR 1000.

2 days INR 1000
4 Pay stamp duties online, file all incorporation forms and documents online and obtain the certificate of incorporation

As a result of MCA's desire to further the e-governance's initiatives, as of January 1, 2010 it has been made compulsory to pay all stamp duties on incorporation documents online through the Ministry of Corporate Affairs (MCA) website. As a result of these reforms, the mode of payment of stamp duty through affixation of adhesive stamps on Articles of Association and Memorandum of Association has been replaced by the e-payment of applicable stamp duty on Articles and Memorandum of association through MCA portal. Moreover, certain forms: Form 1 (a primary form used in the incorporation process), Form 5 & Form 44 will also be stamped electronically through MCA Portal. The reforms also provide that the documents on which e-stamping has been done, need not to be filed physically: electronic filing of the same would be sufficient.

For registration, the following forms are required to be electronically filed on the website of the Ministry of Company Affairs:
(a) e-form 1;
(b) e-form 18;
(c) e-form 32
Along with these documents, scanned copies of the signed and the Memorandum and Articles of Association, must be attached to Form 1. Proof of location Registered Office in the Form of Lease Deed or NOC from the Owner must be attached to Form 18. The 3 forms as well as the memorandum and articles of association must be certified by a practicing professional regarding the correctness of the information/declarations.
- The fees for registering a company can be paid online using a credit card or by payment in cash at certain authorized banks.
- The certificate of incorporation is immediately issued by the Registrar of Companies, signed digitally and sent via email to the Company.

The registration fees paid to the Registrar are scaled according to the company’s authorized capital (as stated in its memorandum):
- INR 100,000 or less: INR 4,000.
If the nominal share capital is over INR 100,000, additional fees based on the amount of nominal capital apply to the base registration fee of INR 4,000:
- For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 100,000, up to INR 500,000: INR 300.
- For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 500,000, up to INR 5,000,000: INR 200.
- For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 5,000,000, up to INR 10,000,000: INR 100.
- For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 10,000,000: INR 50.

The payment of fees has to be done online; the applicant makes the payment through credit cards and the system accepts the documents immediately. Please note that in Mumbai, RoC requests for pre-scrutiny of documents for any correction thereon, before the documents are uploaded, so that once the documents have been uploaded, it can be approved without any further correction. The online filing mechanism requires only one copy of scanned documents to be filed (including stamped MOA, AOA, and POA).

Schedule of Registrar filing fees for the articles and for the other forms (l, 18, and 32):
- INR 200 for a company with authorized share capital of more than INR 100,000 but less than INR 500,000.
- INR 300 for a company with nominal share capital of INR 500,000 or more but less than INR 2,500,000.
- INR 500 for a company with nominal share capital of INR 2,500,000 or more.

According to Maharashtra Stamp Act, 1958, the stamp duty payable on the memorandum and articles of association for company incorporation in Mumbai, Maharashtra, is as follows:
- Articles of association: INR 1000/- for every INR 500,000/- of share capital (or part thereof), subject to a maximum of INR 5,000,000.
- Memorandum of association: INR 200.
- Form-1 (declaration of compliance): INR 100.
3-7 days INR 24,800
5 Make a seal

Although making a seal is not a legal requirement for the company to be incorporated, companies require a company seal to issue share certificates and other documents.
1 day INR 350
6 Visit an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) Investors Services Ltd to obtain a Permanent Account Number (PAN)

Under the Income Tax Act, 1961, each person must quote his or her permanent account number (PAN) for tax payment purposes and the tax deduction and collection account number (TAN) for depositing tax deducted at source. The Central Board of Direct Taxes (CBDT) has instructed banks not to accept any form for tax payment (Chalan) without the PAN or TAN, as applicable.

The PAN is a 10-digit alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department. In order to improve PAN related services, the Income Tax department (effective July 2003) outsourced their operations pertaining to allotment of PAN and issue of PAN cards to UTI Investor Services Ltd, which was authorized to set up and manage IT PAN Service Centers in all cities where there is an Income Tax office.

The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The PAN application is made through the above mentioned service centers on Form 49A, with a certified copy of the certificate of registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 85 (plus applicable taxes currently at 12.36%) applies for processing the PAN application.

IT PAN Service Centers or TIN Facilitation Centers will supply PAN application forms (Form 49A), assist the applicant in filling up the form, collect filled form and issue acknowledgement slip. After obtaining PAN from the Income Tax department, UTIISL or NSDL as the case may be, will print the PAN card and deliver it to the applicant.

The application for PAN can also be made online but the documents still need to be physically dropped off for verification with the authorized agent. For more details (www.incometaxindia.gov.in , www.utiisl.co.in , www.tin-nsdl.com)


7 days INR 85 for Fee and INR 5 for Application Form, (if not downloaded)
* 7 Obtain a tax account number for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department

The tax deduction and collection account number (TAN) is a 10-digit alphanumeric number required by all persons responsible for deducting or collecting tax. The provisions of Section 203A of the Income Tax Act require that all persons who deduct or collect tax at the source must apply for a TAN. The section also makes it mandatory for the TAN to be quoted in all tax-deducted-at-source (TDS) and tax-collected-at-source (TCS) returns, all TDS/TCS payment Chalans, and all TDS/TCS certificates issued. Failure to apply for a TAN or to comply with any of the other provisions of the section is subject to a penalty of INR 10,000/- .

The application for allotment of a TAN must be filed using Form 49B and submitted at any TIN Facilitation Center authorized to receive e-TDS returns. Locations of TIN Facilitation Centers are at www.incometaxindia.gov.in and tin.nsdl.com. The processing fee for both applications (a new TAN or a change request) is INR 55 (plus applicable taxes - currently at 12.36%).
After verification of application, the same is sent to Income Tax Department and upon satisfaction the department issues the TAN to the applicant. The national government levies the income tax. Since outsourcing, any authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) can accept and process the TAN application.

The application for TAN can be made either online TAN can be through the NSDL website www.tin-nsdl.com or offline. However, after the payment of the fee by credit card, the hard copy of the application must be physically filed with NSDL.
7 days, simultaneous with previous procedure INR 55
* 8 Register with Office of Inspector, Mumbai Shops and Establishment Act

A statement containing the employer’s and manager’s name and the establishment’s name (if any), postal address, and category must be sent to the local shop inspector with the applicable fees.

According to Section 7 of the Bombay Shops and Establishments Act, 1948, the establishment must be registered as follows:
- Under Section 7(4), the employer must register the establishment in the prescribed manner within 30 days of the date on which the establishment commences its work.
- Under Section 7(1), the establishment must submit to the local shop inspector Form A and the prescribed fees for registering the establishment.
- Under Section 7(2), after the statement in Form A and the prescribed fees are received and the correctness of the statement is satisfactorily audited, the certificate for the registration of the establishment is issued in Form D, according to the provisions of Rule 6 of the Maharashtra Shops and Establishments Rules of 1961.

Since the amendments in the Maharashtra Shops & Establishment (Amendment) Rules, 2003 dated 15th December 2003, the Schedule for fees for registration & renewal of registration (as per Rule 5) is as follows:
0 employees: INR 120
1 to 5 employees: INR 360
6 to10 employees: INR 720
11 to 20 employees: INR 1200
21 to 50 employees: INR 2400
51 to 100 employees: INR 4200
101 or more: INR 5400.

Hence in the given case the registration fees would be INR 2400, as there are 50 employees.

In addition, an annual fee (three times the registration and renewal fees) is charged as trade refuse charges (TRC), under the Mumbai Municipal Corporation Act, 1888.

2 days, simultaneous with previous procedure INR 2,400 (registration fee) + 3 times registration fee for Trade Refuse Charges (INR 7,200)
* 9 Register for VAT online

VAT online registration was introduced by the Commissioner of Sales Tax, Maharashtra State, Mumbai, Trade Circular No. 4T of 2009, dated January 23, 2009. According to Notification No. VAT/AMD-1009/ IB/Adm-6, dated 26th August 2009, application for registration of VAT by the founders who are required to obtain registration or those who voluntarily desire to get registration can be, as of 1st October 2009, filed electronically on the website www.mahavat.gov.in.
After the completed application form is submitted online, an acknowledgment containing the date and time for attending before the registering authority along with code/designation and address of registering authority is generated. The company should print a copy of the completed e-application and submit it along with the acknowledgement to the registration authority for verification and photo attestation on a given date and time along with relevant documents. If the application is correct and complete in all respect along with relevant documents then the registering authority will generate TIN after verification of the documents. Registration certificate will be printed and issued to the company on the appointed date. Usually, the appointment date is scheduled in the next 10 days.

Other accompanying documentation includes:
- Certified true copy of the memorandum and articles of association of the company.
- Proof of permanent residential address. At least 2 of the following documents must be submitted: copy of passport, copy of driving license, copy of election photo identity card, copy of property card or latest receipt of property tax of Municipal Corporation, copy of latest paid electricity bill in the name of the applicant.
- Proof of place of business (for an owner, the case of Doing Business): Proof of ownership of premises or lease agreement or any other relevant documents
- One recent passport size photograph of the applicant
- Copy of Income Tax Assessment Order having PAN or copy of PAN card
- Chalan in Form No. 210 (original) showing payment of registration fee at INR 5000/in case of voluntary RC and INR 500/in other cases






10 days, simultaneous with previous procedure INR 500 (Registration Fee) + INR 25 (Stamp Duty) for compulsory VAT registration
* 10 Register for profession tax

Profession Tax online registration was introduced by the Commissioner of Sales Tax (Profession Tax), Maharashtra State, Mumbai vide Notification No. PFT2012/NTF 15/Adm-20, dated 19 March 2012. As of April 2012, all applications for registration (i.e. for obtaining a Profession Tax Registration Certificate) are required to be made online, on the website of www.mahavat.gov.in, in 'Form I'. In addition, the employer must obtain a certificate of enrolment under section 5(2) of the Profession tax Act; thus, the company is required to submit Form II. The form I and II are submitted simultaneously to the registering authority's online portal.

According to section 5 of the Profession Tax Act, every employer (not being an officer of the government is liable to pay tax and shall obtain a certificate of registration from the prescribed authority. Depending on the nature of the business, the application should be supported with such documents as address proof, details of company registration number under Indian Companies Act (1956), details of head office (if the company is a branch of company registered outside the state), company deed, certificates under any other act, and so forth.
2 days, simultaneous with with previous procedure no charge
* 11 Register with Employees' Provident Fund Organization

The Employees Provident Funds & Miscellaneous Provisions Act, 1952 applies to an establishment, employing 20 or more persons and engaged in any of the 183 Industries and Classes of business establishments, throughout India excluding the State of Jammu and Kashmir. The Provident Fund registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. Provident Fund registration is optional if workforce size is not more than 20.

As of April 2012, all employers must register online with the EPFO online portal in order to generate challans for making any remittances (www.epfindia.gov.in). Filing of Electronic Challan cum Return (ECR) and deposit of contributions are also done online through the same website. Along with the information regarding the employees to be provided by the employer for registration, it has been made mandatory to submit the AADHAAR (unique identification) details of employees. All eligible employees are required to become members of the Fund and individual account number is allotted by the employer in prescribed manner.
12 days, simultaneous with with previous procedure no charge
* 12 Register for medical insurance (ESIC)

Registration is the process by which every employer/factory and every employee employed for wages are identified for the purpose of the medical insurance scheme and their individual records are set up for them.

As per the Employees' State Insurance (General), Form 01 is the form required to be submitted by Employer for registration. It takes 3 days to a week for the Employer Code Number to be issued. The "intimation letter" containing the Code Number is sent by post to the employer and that takes an additional couple of days.

The Employee’s individual insurance is a separate process and occurs after Employer’s registration. The Employer is responsible for submitting the required Declaration Form and employees are responsible for providing correct information to the employer. The employee temporary cards (ESI Cards) are issued on the spot by the local offices in many places. The temporary cards are valid for 13 weeks from the date of appointment of the employees. It takes about 4 to 5 weeks to get a permanent ESI card. In order to insure that all the insured persons receive their identity cards to enable them to receive cash and medical benefit, the identity cards will be delivered to the insured persons directly by the ESI Corporation rather than through the employers.

The ESI Act applies to all establishments employing 20 or more persons. The ESI Act provides for sickness benefits, medical relief, maternity benefits for women workers, compensation for fatal and other employment injuries, etc. Every employee who receives wages up to Rs. 15,000 per month is covered by this Act. Employers can now submit application online for registration under ESI Act on the ESIC website (www.esic.in).

9 day, simultaneous with with previous procedure no charge
* Takes place simultaneously with another procedure.

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